HMRC Unveils Ambitious Plan to Boost Procurement Spending with Civil Society

In a significant move to enhance engagement with the voluntary, community, and social enterprise (VCSE) sector, HM Revenue and Customs (HMRC) has published its first-ever action plan designed to increase procurement spending with these organizations. This strategic initiative aims to foster a more inclusive and collaborative environment for VCSEs, aligning with broader government policies to maximize social value in public procurement processes.

Background and Significance

The VCSE sector plays a vital role in delivering public services, often providing essential support to local communities. Their deep understanding of local needs makes them ideal partners in creating more compassionate and responsive public services. However, despite their potential, VCSEs have traditionally faced barriers in participating in public procurement processes. The new HMRC plan seeks to address these challenges by simplifying procurement procedures and promoting greater VCSE engagement.

Historical Spending Trends

Over the past few years, HMRC's direct spending with VCSEs has seen fluctuations. In 2021-22, the expenditure stood at £299,000, rising to £2.23 million in 2022-23 but then decreasing to £1.88 million in 2023-24. These figures highlight both the potential for growth and the need for consistent strategies to support VCSE engagement in procurement processes[1][3].

Key Elements of the Action Plan

HMRC's action plan for 2025-26 focuses on five core areas to enhance VCSE participation:

• Promoting the VCSE Agenda: This involves raising awareness and understanding of the VCSE sector among HMRC staff and commissioners.
• Simplifying the Procurement Process: The aim is to reduce complexity, making it easier for VCSEs to bid for and secure contracts.
• VCSE Engagement: HMRC will engage more actively with VCSEs to better understand their challenges and opportunities in procurement.
• Supply Chain Engagement: Fostering partnerships with VCSEs throughout the supply chain to enhance resilience and social value.
• Improving VCSE Data Collection: Enhancing data tracking to better monitor and target initiatives for VCSE engagement[2][3].

Action Items and Milestones

Some of the key actions outlined in the plan include:

• Appointing a VCSE Workstream: By May 30, 2025, this will provide strategic oversight and direction to implement the VCSE agenda.
• Automating VCSE Spend Tracking: By July 31, 2025, to improve visibility and develop targeted initiatives.
• Identifying Underutilized Categories: Working with Social Enterprise UK to identify areas where VCSEs are underrepresented, by December 31, 2025.
• Training Sessions for Commissioners: Scheduled for January 31, 2026, to ensure best practices in engaging VCSEs are consistently adopted.
• Setting Future Spend Targets: By March 31, 2026, to provide clear strategic direction for future VCSE engagement[3].

Legal and Policy Framework

The HMRC plan is supported by recent legislative developments, including the Procurement Act 2023, which introduces greater flexibility for contracting authorities to design procurement processes that meet their needs while promoting social value. Additionally, the Social Value Act encourages public sector commissioners to consider social value when awarding contracts[1][4].

National Procurement Policy Statement

The government's National Procurement Policy Statement, updated in February 2025, emphasizes the importance of maximizing procurement spend with SMEs and VCSEs to drive economic growth and strengthen supply chains. It also highlights the need for delivering social and economic value through public contracts[5].

Impact and Future Directions

This initiative by HMRC not only reflects a commitment to supporting the VCSE sector but also aligns with broader national strategies for enhancing social value and promoting a more inclusive procurement environment. As HMRC works to implement this plan effectively across the department by March 2026, it will be crucial to monitor progress regularly and adapt strategies based on feedback from the VCSE sector.

Insights from Stakeholders

Claire Dove, the VCSE Crown Representative, expressed enthusiasm for working closely with HMRC to promote the benefits of partnerships with VCSEs. She noted that this action plan builds on previous achievements and will help HMRC deliver on its ambitious plans for VCSE engagement[1].

Conclusion

HMRC's action plan signifies a significant step forward in fostering a collaborative relationship between the government and civil society. By addressing barriers and enhancing engagement, HMRC aims to not only increase procurement spending with VCSEs but also contribute to creating more responsive and efficient public services. As this initiative unfolds, it will be important to assess its impact and continue refining strategies to ensure that VCSEs can fully contribute to the delivery of public services in a way that maximizes social value and supports local communities.